Our website uses cookies to improve your user experience. If you continue browsing, we assume that you consent to our use of cookies. More information can be found in our Cookies Policy and Privacy Policy.

ShareAction chief Catherine Howarth on the battle for transparency

Catherine Howarth is passionate about reconnecting the public to the investment world. The chief executive of ShareAction, the charity that promotes responsible investment, has made it her personal mission to bring people closer to the institutions they are invested in.

She says: “We are trying to bring people at pension funds face-to-face with clients. This is an organisation that is going to have an influence. I am interested in what firms are doing and what decisions they are making on people’s behalf. People sometimes don’t know that side of things but when they come together there is some magic about it.”

Howarth joined ShareAction in July 2008, having previously been the founder and lead organiser of West London Citizens. Earlier in her career she was senior researcher at the New Policy Institute and also spent five years as a member nominated trustee of The Pensions Trust, serving for four years on its investment committee.

Her battle for more transparency and accountability in the investment world stems from one key issue.

“A very tiny elite of the economy is making decisions on my and many other people’s behalf without having any sense of what our real lives are at all. An industry that is this important – that looks after our money – should be better connected to people’s lives and realities, and we should be able to see what they are really up to.”

ShareAction’s agenda has never been busier thanks to the recent intense AGM season, which attracted a lot of media attention. She points to BP’s meeting in April, one of the first of the season, where 60 per cent of shareholders voted against a multi-million pound pay package for its chief executive.

“A large group of investors thought that this deal was really wrong and if you get one of the first meetings of the season with a big defeat from its members, that becomes a little contagious. These days, shareholders don’t want to be on the wrong side of the majority vote; they don’t want to be the people that vote just to support a pay deal.”

Some players are making the right moves but that almost puts them at a competitive disadvantage against those that shamelessly carry on as they were

On the topic of fund fees and transparency in the asset management world more specifically, Howarth believes the media plays a key role in reporting on any misconduct.

“Fund managers don’t always show their fees because they don’t have to. There is such a compelling case for regulation here and so it is good to see the FCA is doing a major review. I think it is going to find that this is a market with huge information asymmetry, and very complicated products and fee structures.

“Not only should there be strong rules around the requirement to make transparent all kinds of fees and underlying costs that get pushed on to the consumer, but they should be presented in a standardised way that allows third parties, such as journalists or the FCA itself, to produce a really clear ranking that can compare like to like.”

“Some individual players are making the right moves but that almost puts them at a competitive disadvantage against those that shamelessly carry on as they were.”

Howarth says a tougher response from the regulator should come in the form of a cap on fees but should also provide greater insight and clarity on incentive structures. Indeed, while she is encouraged by the “amazing” movement around fees and charges, she believes more needs to be done in exploring what the charges are actually levied for, what incentivises those in the asset management world and whether it is good for customers.

“We are looking into pay incentives, researching this area and understanding the fees, but more on what the fees are actually paying for. Obviously they pay mostly for salaries, of which a lot are made up of bonuses, so we are looking at how people are incentivised. We want to see a truly responsible investment system where investors are focused on long-term company performance, including how they interact with customers.”

Howarth sees ShareAction, which has grown from four to 24 people in eight years, as a watchdog that encourages firms to do the right thing. For her, this is crucial, as the asset management industry now has a bigger role to play in the wider society.

She says: “Asset managers are systemically important in the sense that millions of consumers depend on them. It is a different type of systemic risk to the banks but one day there will be a system whereby people will not have enough to live on in their retirement so asset managers have an incredibly important role to play in the economy and society.

“The UK public pensions payouts are one of the lowest in Europe and we have all this dependency on income in old age in this industry. But that is a scenario in which you do need some pretty good regulation.”

As Howarth meets with more industry experts, she expects her battle to continue. Indeed, the path ahead seems long.

She says: “I am not cynical about people in the industry but I am a bit cynical about some of the dynamics and drivers at a company level. The status quo is very powerful, especially when you have a lot of vested interest supporting it, and on the other side the consumer is both powerless and in the dark.

“That doesn’t make our job easy but it makes it important. And that is what gets me up in the morning.”

Recommended

Financial education is like ‘motherhood and apple pie’. No one is supposed to criticise it. But, at the risk of appearing iconoclastic, the evidence suggests that it doesn’t really work. There are exceptions, of course, but many of the studies quoted by advocates are based on self-reported surveys – for example, consumers saying they feel […]

Axa UK has agreed to sell the remaining part of its Wealth arm to Phoenix Group for £375m. The Wealth business includes Embassy, Axa’s off-platform investment and pension division and Sun Life, its direct protection business which provides cover for the over 50s market. The deal will add £12.3bn of assets and over 910,000 policies […]

Alliance Trust has confirmed that it is in talks over a £5bn merger with RIT Capital Partners. The investment group says it has had an informal approach from RIT, an investment trust chaired by Lord Rothschild, but added no further details. The combined firms would be worth around £5bn, as Alliance is valued at £2.6bn […]

Well we’ve had scorching weather (yes even up here in Scotland!) and now the Euros 2016 are on – you can’t blame people for wishing life was just one big holiday. With all these distractions it sometimes feels like work just gets in the way of having a good time! But sunny day skivers are […]

Newsletter

Latest from Money Marketing

The Competition and Markets Authority has criticised insurers over “stealth price rises” and costly exit fees for loyal customers. The watchdog looked into areas including cash savings, mortgages and home insurance after charity Citizens Advice raised a so-called “super complaint” over how longstanding customers are treated by financial services organisations. The CMA has recognised that […]

Banking lobbyists have warned that UK banks currently face higher tax rates than international counterparts, and that these could hasten banks’ departures if they remain after Brexit. Reuters reports that research commissioned by UK Finance and carried out by consultancy PwC shows London banks face an effective tax rate on profits of 50.6 percent, above […]

Barclays has been fined $15m (£11.9m) by US regulators after attempts were made to unmask a whistleblower by chief executive Jes Staley. In 2016, a Barclays employee sent two letters regarding concerns over the chief executive’s decision to hire a former colleague to work at the bank. The whistleblower posed questions both over the experience […]

19th December 20188:33 am

Comments

Leave a comment

Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.